Skadden – This article appeared in the 2015 edition of The International Comparative Legal Guide to: Alternative Investment Funds; published by Global Legal Group Ltd, London.

Regulatory Framework

In the United States, Alternative Investment Funds and their advisers are subject to the laws of the federal government and of the individual state or jurisdiction in which the entities are incorporated, doing business and/or selling securities. At the federal level, investment companies organised in and/or operating in the United States, including Alternative Investment Funds, are generally subject to the jurisdiction of the Securities and Exchange Commission (“SEC”).

The SEC’s jurisdiction comes by way of the Investment Company Act of 1940, as amended (“Investment Company Act”), which governs the activities of investment companies, and the Investment Advisers Act of 1940, as amended (“Advisers Act”), which governs the operations and activities of investment advisers. In addition, the offering and sale of interests in Alternative Investment Funds is regulated by the SEC under the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”), and are also regulated by the Financial Industry Regulatory Authority (“FINRA”), a selfregulatory agency.

In addition, depending on the activities of the fund, other federal regulators may have jurisdiction over the fund or its adviser. Alternative Investment Funds that invest in futures, options on futures, or swaps (other than certain security-based swaps) are subject to the jurisdiction of the Commodity Futures Trading Commission (“CFTC”).

Further, Alternative Investment Funds sponsored by banks or bank holding companies may also be subject to certain requirements under the federal banking laws and may be subject to the jurisdiction of the Board of Governors of the Federal Reserve System (“Federal Reserve”). Alternative Investment Funds that trade or invest in electricity are subject to regulation by the Federal Energy Regulatory Commission (“FERC”).